Facebook keeps growing

The web giant continues to be the template that all social media start-up companies try to replicate. 

Source: Bloomberg

On Wednesday 22 April, after the markets have closed, Facebook is due to release its first-quarter figures. The year-on-year first-quarter adjusted earnings are called to increase from $0.34 up to $0.403, while the company’s sales are called to improve by 42.5% from $2.502 billion up to $3.566 billion. These year-on-year figures should also see the company’s pre-tax profits jump by 67.25% from $1.075 billion in 2014, up to $1.798 billion in 2015.

Institutional analysis is still strongly bullish on the internet firm, with 47 buy recommendations, seven holds, and only one sell. The average price target for the next 12 months is $92.67 – still some 12.75% above the current market share price.

Arguably, the area where Facebook has shown the greatest skill ahead of its counterparts in the social media arena is being able to monetise its huge user base.

Last month Facebook confirmed that it has 2 million active advertisers in the last 8 months, up from 1.5 million. This partly explains how the shares hit an all-time high in February of $86.07. Facebook has also embarked on acquisitions, and WhatsApp is shaping up to be the best of the bunch.

Last week, WhatsApp’s CEO confirmed that it had 800,000,000 monthly active users – an increase of 100 million users from the beginning of the year. This is the second largest number of active users, second only to Facebook who have over 1 billion active monthly users. This growth, however, is not as mature as Facebook’s as it is still making a loss – $138 million last year.

Over the last three months the 50- and 100-day moving averages have proven to be supportive of the share price. Since the shares spiked in March up to an all-time high of $86.07 and moved into overbought territory, they have oscillated around $82 and are waiting for a catalyst to move higher.

The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication.

Find articles by analysts